Bill would eliminate "hospital tax"

Bill Cummings

Updated 11:52 pm, Thursday, March 13, 2014

HARTFORD -- Connecticut's hospitals are asking the General Assembly to eliminate a tax originally designed to help balance the state budget, but is now increasing health care costs and threatening jobs, they say.

During testimony Thursday before the General Assembly's Finance, Revenue and Bonding Committee on a bill that would phase out the tax by 2019, hospital officials said the rules have changed.

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The tax was instituted in 2011, when the state faced a multibillion-dollar budget deficit, and was intended to have no net effect for most hospitals. The state was to claim the hospital tax receipts as Medicaid payments and send a portion of the additional federal reimbursement back to the hospitals, while applying the remainder to the deficit.

But hospital officials on Thursday said the formula changed in 2012 and the tax now far exceeds state reimbursement.

"From the beginning, Greenwich Hospital was one of a handful of hospitals who were negatively impacted by the hospital tax, meaning we paid more in taxes than we received through redistribution," Corvino said.

"We have done extraordinary things to minimize the impact to patient care. But it is very challenging. Last year, Connecticut hospitals eliminated 1,400 jobs, reduced staff salaries and benefits, reduced some services and postponed investments in technology and infrastructure," Corvino said.

"The hospital tax is not being implemented as originally passed. The new budget continues taxing hospitals $350 million per year, but only returns $249 million in 2014 and $115 million in 2015. The hospital tax means providing care with even few resources, affecting access and service to all patients," Marcus said.

Frayne, the Connecticut Hospital Association official, said the tax this year will raise the average cost of treating a patient by $49. That per-patient cost will rise to $114 by 2015, he said.

"In the last year, we eliminated important programs and services for patients, reduced staff salaries and benefits, reduced hours and jobs and postponed investments in technology and infrastructure. This is having a negative effect on our local economy. And this is just the beginning, as the tax will double this year," Rynn said.

Victor Santos, network support specialist at Milford Hospital, said the hospital has reduced 20 full-time positions, cut a nutritional counseling program and postponed equipment purchases.

"Milford Hospital is being challenged by this tax," he said. "Through the years, the community has relied on the hospital, not only for its caregivers, but also for its contribution to local economy."

Griffin Hospital in Derby also urged lawmakers to phase out the tax, saying, "Hospitals in every corner of the state were -- and continue to be -- faced with the challenge of providing care with even fewer resources, affecting access and services for all patients."